When Kinross Gold (TSX: K; NYSE: KGC) bought the Great Bear project in northern Ontario’s prolific Red Lake district two and a half years ago, its thinking was to acquire an extraordinarily high-grade gold asset that would one day become a world-class mine.
Now a preliminary economic assessment (PEA) and an updated resource estimate seem to bear that out. A combined open-pit and underground mine could produce an average of 518,000 oz. gold a year at an all-in sustaining cost of US$812 per oz. over the first eight years of an initial 12-year mine life, Kinross said Tuesday
First production after a two-year construction period could start as early as 2029. At current estimates Great Bear is expected to produce a total of 5.3 million oz. at cash costs of US$594 per ounce.
“We became new owners in February 2022 and what we saw in Great Bear at that time and continue to see today is a top-tier asset with significant potential for a large, long-life, low-cost mining complex,” Kinross CEO Paul Rollinson told investors and analysts on a conference call. “The PEA is a point in time estimate and is only showing an initial window into the long-term potential of this asset. We see potential to support a multi-decade asset.”
$1.4 billion capex
The project, 500 km northwest of Thunder Bay, has an after-tax net present value (at a 5% discount rate) of US$1.9 billion and an internal rate of return of 24.3% at a gold price of US$1,900 per ounce. Construction costs were pegged at $1.2 billion, and total initial project capital costs of US$1.4 million could be paid back in just under three years.
